COMMISSIONER OF CENTRAL EXCISE Vs. SUTHAM NYLOCOTS

JUDGEMENT

(1.) This appeal by the Revenue is directed against the final order passed by the Customs, Excise and Service Tax Appellate Tribunal (The Tribunal) dated 23-6-2005 in Pinal Order No. 876 of 2005 [2005 (188) E.L.T. 26 (Tri.-Chen.)] The appeal has been admitted on the following questions of law :

(2.) The respondent/assessee are manufacturers of the industrial fabrics (cotton and nylon). The respondent classified the goods under Chapter Heading Nos. 52.08 and 54.06. The Department did not accept the said classification and classified the goods under Heading 59.11 of the Central Excise Tariff Act schedule (CETA Schedule). The period in question is from April 2001 to January, 2002 and during this period, the respondent had removed products without payment of excise duty by claiming benefit of exemption under a Notification. Since the Department did not agree with the classification of the product by the respondent/assessee, a show cause notice dated 5-4-2002 was issued proposing a demand of duty and penalty. Subsequently, the respondent/assessee accepted the classification as done by the Department and accordingly paid duty on the goods. It is relevant to note that during the said period, the respondent was not registered with the Central Excise Department. The Original Authority by order dated 31-12-2003 confirmed the duty and imposed equivalent penalty under Rule 173Q of the Central Excise Rules, 1944 and demanded interest at appropriate rate on the duty amount under Section 11AB of the Central Excise Act.

(3.) Aggrieved by the same, the respondent/assessee preferred appeal to the Commissioner (Appeals). The First Appellate Authority, by order dated 14-6-2004 reduced the penalty to Rs. 2,35,000/-, upheld the order demanding interest under Section 11AB of the Act and thus rejected the appeal as regards the demand of duty, claim for Cenvat credit and interest on duly. Thus the appeal was partly allowed, as regards the penalty to the extent indicated. Aggrieved by such order, the respondent/assessee preferred appeal to the Tribunal, in which three questions were considered by the Tribunal viz.